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Successful habits of top farmers

Progressive Dairyman Editor Karen Lee Published on 11 December 2018
Training

As a principal in the Agri-Food Management Excellence program and owner of his own consulting business, Larry Martin has worked with a lot of farmers across Canada to analyze and improve their businesses.

“I see a lot of what works and what doesn’t work,” Martin said as he addressed a crowd at Canada’s Outdoor Farm Show in Woodstock, Ontario, in September. The presentation was part of the RBC Agriculture Speaking Series.

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From his 40 years of experience, Martin identified nine best management practices used by successful farmers.

1. Continuous learning

Top managers continually advance their knowledge and skills by participating in a variety of educational opportunities. These can include, but are not limited to, formal courses, peer groups, coaching, reading books and articles, and attending conferences and trade shows.

This is not just from observation, Martin said. A recent study revealed the practice of continuous learning was found to be correlated with profitability.

2. Treat the farm as a business

While there is much to farming that can be enjoyed, a successful farmer isn’t in it just for fun. They treat their farm as a business and act as a manager of that business.

Many farmers have extremely strong values that focus on farming, family and community. “The best way to manifest these values is to have an extremely strong business,” he said. A strong business is better equipped to reward family members and invest in the community.

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3. Have a positive attitude

“It seems to be a cultural thing that when farmers get together, they talk about how bad it is,” Martin said. Instead of dwelling on the bad, he suggested shifting focus to what you did well and what you can do better.

4. Have goals and a written business plan

“I get more and more adamant about this every year,” Martin said. “Knowing what’s important keeps you from focusing on what’s not important.”

It is good to have a plan, but successful farmers put it in writing. Their plans also contain measurable goals.

“Measuring and understanding actual performance invariably improves performance. If you don’t measure, you can’t manage,” he said.

5. Implement the written plan

Once the business plan is in place, define three to five strategic intents and develop an operating plan for each one. Identify the major action, who will be responsible, the due date, any resources required and how it will be measured.

6. Understand financial statements and use them for management decisions

Financial statements are not just for tax purposes. By understanding these statements and the ratios that can be generated from them, farmers can use this data to make strategic and operational decisions. They can measure performance and assess and manage risk.

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It can also make a huge difference in access to capital when farmers know and understand their debt and investment ratios, he said.

7. People are assets, not costs

Understand and practice good human resource management. By offering training, performance bonuses, equity or phantom shares, farmers can better attract and retain employees.

8. Disciplined marketing

The value proposition is increasing in importance in agriculture. Listening to customers and identifying their needs and wants can help in producing products for the marketplace. Martin said he is seeing different product mixes and more farms shifting away from “commodity” products.

For commodity producers, he said it is good to understand the futures marketing and various pricing instruments. Develop clear objectives and follow a disciplined marketing plan.

9. Succession planning

Successful farmers deal with succession before they have to, Martin said. A good succession plan has three components: transition of management, transition of ownership and financing the transfer of ownership.

“I see more families in anguish, more farms lost, more taxes paid because succession is not dealt with early enough,” he said.

While this is not a comprehensive list, and there are probably more characteristics held by successful farm managers, adopting several of these habits could lead business owners to continuous improvement of their farms.  end mark

ILLUSTRATION: Illustration by Kristen Phillips.

Karen Lee
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